Note 16.

Stock-Based Compensation

The Company applies the provisions of FASB ASC 718, "Compensation – Stock Compensation," to account for the Company's share-based compensation. Share-based compensation cost is measured at the grant date based on the calculated fair value of the award and is recognized over the employees' requisite service period. The Company recorded stock compensation expense of $1,958,000, $1,944,000 and $653,000 for the periods ended December 31, 2011, 2010 and 2009, respectively, related to stock option awards, fully-vested stock awards, restricted stock awards and performance unit awards as follows.

Stock Option Awards

The Company has three equity compensation plans: The 1985 Long-Term Incentive Plan (1985 Plan), the 1998 Long-Term Incentive Plan for Officers and Directors, amended and restated in May 2011, (1998 Plan) and the 2006 Omnibus Incentive Plan, amended and restated in May 2011 (Omnibus Plan). The 1985 Plan expired on January 1, 2005. Although no further awards can be made under the 1985 Plan, prior awards are not affected by the termination of the Plan.

The 1998 Plan provides for the award of options to key employees and directors to purchase up to 900,000 shares of Common stock at no less than 100% of fair market value on the date of the grant. The 1998 Plan provides for the granting of "nonqualified options" and "incentive stock options" with a duration of not more than ten years from the date of grant. The Plan also provides that, unless otherwise set forth in the option agreement, options are exercisable in installments of up to 25% annually beginning one year from date of grant. Outside directors were automatically awarded fully vested, nonqualified stock options to acquire 5,000 shares of the Company's Common stock on each date the outside directors were elected at an annual shareholders' meeting to serve as directors. The 1998 Plan was amended in May 2006 to remove the automatic awarding of options to outside directors.

The Omnibus Plan allows for the issuance of 900,000 shares of Common stock through the granting of stock options or stock awards (including performance units convertible into stock) to key employees and directors at no less than 100% of fair market value on the date of the grant. The Omnibus Plan provides for the granting of "nonqualified options" with a duration of not more than ten years from the date of grant. The Omnibus Plan also provides that, unless otherwise set forth in the option agreement, options are exercisable in installments of up to 25% annually beginning one year from the date of grant. No options have been granted under the Omnibus Plan.

There was no stock compensation expense related to stock options recorded in 2011 or 2010. The Company recorded stock compensation expense related to stock option awards of $25,000 for the period ended December 31, 2009.

Certain information for the three years ended December 31, 2011 relative to employee stock options is summarized as follows:

		2011	2010	2009
Number of shares under Incentive Plan:
	Outstanding at beginning of year	80,950	180,950	194,700
	Granted	-	-	-
	Canceled	-	-	-
	Exercised	(41,000)	(100,000)	(13,750)
Outstanding and Exercisable at end of year		39,950	80,950	180,950
Number of shares available for future grant:
Beginning of year		391,881	443,566	471,627
End of year		321,653	391,881	443,566

At December 31, 2011, Common stock options outstanding and exercisable under the Plans had option prices ranging from $4.23 to $14.77, with a weighted average price of $8.94. At December 31, 2010 and 2009, Common stock options outstanding and exercisable under the Plans had option prices ranging from $2.75 to $14.77, with a weighted average price of $6.95 and $5.60 per share, respectively.

The weighted average remaining contractual life of the stock options outstanding and exercisable for the three years ended December 31, 2011 are: 2011-2.8 years; 2010-2.7 years; and 2009-2.7 years.

The total intrinsic value of options outstanding and exercisable at December 31, 2011, 2010 and 2009 was $773,000, $2,751,000 and $4,381,000, respectively.

The weighted average exercise price per share of options exercised in 2011, 2010 and 2009 was $5.02, $4.51 and $4.73, respectively.

The total intrinsic value of options exercised during the years ended December 31, 2011, 2010 and 2009 was $1,112,000, $2,483,000 and $359,000, respectively.

Certain information for the year ended December 31, 2011 relative to employee stock options at respective exercise price ranges is summarized as follows:

		Options Outstanding and Exercisable
Range of		Number		Weighted Average		Weighted
Exercise Prices		of Shares		Remaining Life		Exercise Price
	$4.10 - $5.50		6,000		1.3	$	4.21
	$7.81 - $8.97		20,000		2.9		8.39
	$9.29 - $14.77		13,950		3.4		11.75
			39,950		2.8	$	8.94

Shares issued as a result of stock option exercise generally will be from previously issued shares which have been reacquired by the Company and held as Treasury shares.

Fully-Vested Stock Awards

Non-employee directors are automatically awarded 3,500 fully vested shares, or a lesser amount determined by the directors, of the Company's Common stock on each date the outside directors are elected at an annual shareholders' meeting to serve as directors.

The outside directors were granted a total of 10,500, 12,000 and 10,500 fully vested shares for the years ended December 31, 2011, 2010 and 2009, respectively. Compensation expense recorded by the Company related to fully-vested stock awards to non-employee directors was approximately $370,000, $340,000 and $314,000 for the years ended December 31, 2011, 2010 and 2009, respectively.

In addition to the 12,000 shares of fully-vested stock granted to the outside directors in 2010, the Company granted, pursuant to the Omnibus Plan approximately 2,000 fully-vested shares to key employees. The grant date fair value of these fully-vested stock grants was $34.73. The weighted average fair value of all the fully-vested stock grants awarded was $35.24, $29.10 and $29.89 per share for 2011, 2010 and 2009, respectively.

Restricted Stock Awards

The Restricted Stock Awards granted under the Omnibus Plan generally have vesting requirements that are determined by the underlying Restricted Stock Agreement. These forfeitable Restricted Stock Awards time-vest after a four year holding period, unless indicated otherwise by the underlying Restricted Stock Agreement. Shares issued as a result of Restricted Stock Awards generally are previously issued shares which have been reacquired by the Company and held as Treasury shares or authorized but previously unissued common stock.

For the periods ended December 31, 2011, 2010 and 2009, the Company granted approximately 46,000, 40,000 and 18,000 shares, respectively, of restricted stock under the Omnibus Plan:

			Aggregate
		Grant Date	Fair
Grant Date	Shares	Fair Value	Value	Vesting Date

March 3, 2009	17,561	$20.63	$362,283	March 3, 2013
March 3, 2010	12,185	31.92	388,945	March 3, 2014
May 28, 2010	2,500	28.07	70,175	February 28, 2012
May 28, 2010	17,500	28.07	491,225	May 28, 2014
October 21, 2010	7,500	31.04	232,800	October 21, 2014
March 15, 2011	24,836	38.46	955,193	March 15, 2015
July 21, 2011	16,600	38.44	638,104	July 21, 2015
August 29, 2011	5,000	24.50	122,500	August 29, 2014

Certain awards of restricted stock included in the above table provide for partial vesting over a period up to the vesting date listed.

Performance Unit Awards

Annually, under separate three year long-term incentive plans, pursuant to the Omnibus Plan, the Company granted performance units during the periods ended December 31, 2011, 2010 and 2009 as follows:

Aggregate

Grant Date

Fair

Incentive Plan

Grant Date

Units

Fair Value

Value

2009 – 2011

March 3, 2009

52,672

$20.63

$1,086,623

2010 – 2012

March 2, 2010

36,541

31.83

1,163,100

2011 – 2013

March 15, 2011

34,002

38.46

1,307,717

In addition, in 2011 the Company awarded, pursuant to the Omnibus Plan, 1,500 special performance units to an employee director and 1,000 special performance units to an executive. Based on the fiscal 2011 performance of the Company's newly acquired subsidiary, these units may be converted into up to 3,000 and 1,500 shares, respectively, of the Company's common stock. The grant date fair value of these awards was $38.46 and the aggregate fair value was $58,000 and $38,000, respectively.

Performance Units are subject to forfeiture and will be converted into common stock of the Company based upon the Company's performance relative to performance measures and conversion multiples as defined in the underlying plan. The aggregate fair value in the above table is based upon reaching 100% of the performance targets as defined in the underlying plan.

The number of shares awarded under the respective three year long-term incentive plans was determined using an average grant date fair value over a ten day period as follows:

	Average
	Grant Date
Incentive Plan	Fair Value	Ten Day Period

2009 – 2011	$23.21	February 2009
2010 – 2012	29.39	February 2010
2011 – 2013	40.25	February 2011

Excluding the fully-vested stock awards granted to non-employee directors, the Company recorded compensation expense of $1,588,000, $1,604,000 and $314,000, respectively, for the periods ended December 31, 2011, 2010 and 2009 related to restricted stock and performance unit awards. In addition, the Company issued, pursuant to the Omnibus Plan, approximately 20,000 fully-vested shares during 2011 which were earned under the 2008 – 2010 three year long-term incentive plan. This non-cash transaction of $670,000 was reflected as a decrease to Treasury Stock in the Consolidated Balance Sheet at December 31, 2011.

Shares issued as a result of restricted stock awards generally are previously issued shares which have been reacquired by the Company and held as Treasury shares or authorized but previously unissued common stock.

The excess tax benefit realized for the tax deduction from stock-based compensation approximated $425,000, $961,000 and $128,000, for the years ended December 31, 2011, 2010 and 2009, respectively. This excess tax benefit is included in cash flows from financing activities in the Consolidated Statements of Cash Flows.